Next on the Agenda: 100% of the Carriage Wheel Market!

Last week, MissouriNet reported on the president’s speech in Kansas City, in which he talked about clean energy:

President [Barack] Obama said in his speech that just a few years ago, the U-S accounted for 25% of the world’s economy, but was only making 2% of the world’s advanced batteries for hybrid and electric vehicles.

“But thanks to our new focus on clean energy and the work that’s taking place in plants like this one, we could have as much as 40% of the world’s market by 2014,” Obama said.

It is true that if we devote a large amount of our resources to clean energy, we could expand our share of the world’s market. If we wanted to, in fact, I’m sure we could devote exorbitant sums to clean energy and capture 80 percent of the world’s market.

Does that mean that it would be a good investment for the U.S. government? When someone invests her own money, she has a stake in that investment working out. Investors who make wise investments have more money to make additional wise investments. No matter how vital government officials think it is to invest in clean energy, they do not have that feedback; whether they invest wisely or not, their cash inflow is not affected. The government does not have the right competitive mechanisms in place, and thus may create more problems for clean energy than they solve.

Why is that? When the government favors certain types of clean energy over others (perhaps yet undiscovered) energy sources, they change the dynamic. As a result, those energy producers make money not because they efficiently produce energy, but because they have curried political favor. Energy producers who receive government monies are also restrained by government regulation and procedure, which stifles innovation.

From the aforementioned speech (emphasis added):

“[…] But my answer to those who don’t have confidence in our future, who want to stop, my answer is come right here to Kansas City see what’s going on at Smith Electric. I think they’re gonna be hard pressed to tell you that you’re not better off than you would be if we hadn’t made the investments in this plant,” Obama said.

I beg to differ. In the cases where clean energy is as good an investment as some proponents claim, private individuals will be willing to put money toward the venture. Many companies want to use efficient, environmentally friendly energy because consumers appreciate that. Clean energy, at its best, will lower costs, a condition necessary for it to become a primary energy source. Cutting the tax rate for all businesses would better promote the move toward clean energy sources than targeting incentives toward specific clean energy plants. If clean energy production is to become sustainable, it needs further exposure to market forces so that the most efficient product can succeed.